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Western Price Survey

Week's End EditionApril 15, 2011
Hydro Glut Dampens Gas Demand

Generous precipitation throughout the West this winter contributed to natural gas' displacement as a power source, prompting analysts to project "bearish" natural gas pricing through August.

According to Bentek Energy, approximately 295 Bcf overall, or 1.2 Bcf/d of natural gas demand, will be lost with increased hydropower between January and August 2011. The firm also expects Western hydro generation to average 35 percent greater than normal from April through August, thanks to heavy winter snow and rain. Meanwhile, natural-gas-fired generation is expected to be 54 percent lower than normal in April alone.

The U.S. Energy Information Administration reported the first additions to natural gas storage this season, although no change was reported in the West. A net injection of 28 Bcf brought working storage to 1.607 Tcf for the week ending April 8. This is 0.6 percent greater than the five-year average, according to the agency.

Henry Hub spot prices traded at $4.14/MMBtu on April 13, a drop of 3 cents over the previous Wednesday. By Friday the hub was trading for an average of $4.21/MMBtu.

Western natural gas values trended higher during the week. By Friday, April 15, both PG&E CityGate and Southern California Border gas were up a dime versus the previous Friday, closing at $4.35/MMBtu and $4.20/MMBtu. Malin gas earned 9 cents, ending at $4.11/MMBtu.

In the Friday-to-Friday trading period from April 8 to April 15, here's how peak electricity prices fared:

Palo Verde: Up $6.30 to $41.75/MWh.

South of Path 15: Up almost $6 to around $40.90/MWh.

North of Path 15: Reported only three days' trading for a second consecutive week. Closed at $35.90/MWh, up around $3.

California-Oregon Border: Gained almost $5 to $35.55/MWh.

Mid-Columbia: Up $4.55 to roughly $35.25/MWh.

Off-peak electricity prices chalked up larger gains. Over the trading period, Mid-C off-peak ended at around $22.30/MWh, a gain of almost $13.10. California-Oregon Border nighttime power saw similar jumps.

Power demand throughout the West remains soft. Peak demand on the Cal-ISO grid reached 28,531 MW Thursday. The next uptick should occur Tuesday, April 19, when demand should hit about 28,450 MW.

What's ahead: The Pacific Northwest expects temperatures in the 50s during the week ahead with unsettled, cold and likely wet conditions through Thursday, thanks to a lingering cold air mass. San Francisco temperatures remain in the 60s for the week despite a cold front that may bring a sprinkling of rain Monday. After drying out late Monday and into Tuesday, light rains may return midweek. Southern California should have temperatures in the 60s and unsettled weather into midweek
[Linda Dailey Paulson].

Archives of the Western Price Survey for the past year are also available online.

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